Such a move usually leads to liquidation of a company's assets. Eclipse spokesman Keith Spondike confirmed the filing but cautioned the effort remains subject to a judge's approval. He said more information is expected Wednesday.

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Eclipse filed for Chapter 11 protection in November.

The noteholders' decision suggests Eclipse hasn't been able to complete its planned $188 million sale to European-based EclipseJet Aviation International Inc., an affiliate of ETIRC Aviation S.a.r.l .

Spondike said, "something obviously changed, but I don't have the details."

Peter Mitchell, Director of Economic Development for Albuquerque, said the announcement was "a disapointment to the city. We can't change what happened, but we need to use our existing resources to address the issue."

Earlier Tuesday, Action 7 News received an e-mail from an Eclipse employee signed by a company vice-president that read, "Bad news. The note holders have filed a motion with the court to take us into Chapter 7. This means you need to check our website for the details on when to come back and pick up the stuff you have left. E-mail will shut down Wed. at 5 p.m. I'm so sorry for all of this and for taking you through this. May all of you take care and be safe."

The state invested $19 million in Eclipse -- $14 million in equity and $5 million in secured debt.

Don Harris is a city councilor, but by trade he's a bankruptcy lawyer.

"What this means is that these creditors have obviously lost faith in the management of Eclipse," said Harris.

Chapter 7 allows the company to sell what it can to pay these debts off.

In a memo written by Eclipse general manager Michael McConnell to employees, he states, "this action is being supported by the directors of Eclipse."

In the memo, McConnell refers to the hoped-for sale of the company to EclipseJet Aviation and writes, "the closing of the sale transaction has stalled and our company is out of time and money."

McConnell closed the memo on a regretful note. "We gave it one heck of a try," he wrote. "We are sorry that it came to this today."

According to Harris, with the approval of a bankrupty court judge, Eclipse could sell everything it owns piece by piece and close shop completely.

"It is conceivable that someone may buy these assets, including that plant here in Albuquerque and reopen operations in Albuquerque," he said. "I don't know how likely that is. It's not necessarily over for Albuquerque and Eclipse, but its certainly not looking good."

As city councilor, Harris also said that based on the way the city has treated and invested in Eclipse, it should send a messages to other companies that Albuquerque is a place to start and grow a business.